Why are FICA refunds being paid to medical residents and their employers?

On March 2, 2010, the IRS announced that it had made an administrative determination to accept the position that medical residents are excepted from FICA taxes based on the student exception for tax periods ending before April 1, 2005, when new IRS regulations went into effect. This announcement means that the IRS intends to provide a refund of the FICA taxes for individual medical residents and institutions that timely filed refund claims for tax periods ending before April 1, 2005.Return to Top

Who is eligible to receive a refund?

Medical residents employed by the University between January 1, 1994 and March 31, 2005 who signed consent forms authorizing the University to file on their behalf and who were deemed eligible. These refund claims are subject to the same requirements that apply to all FICA refund claims including verification by the IRS of the amount of the claim and payment of interest. Return to Top

If I previously didn’t consent for OUHSC to file a FICA refund on my behalf for the time period January 1, 1994 through March 31, 2005, can I consent at this time?

No. The deadline has passed. We filed the claims with the IRS in November 2010. Return to Top

Can a FICA refund claim still be filed for periods before April 1, 2005?

No. The period of limitations for filing a claim for tax periods before April 1, 2005 has expired. Return to Top

I was a resident after April 1, 2005, will I be able to receive refunds?

No. The IRS enacted regulations effective April 1, 2005 that make payments to residents FICA taxable. One part of these regulations states that an employee who works 40 hours or more (full-time employee) for a school, college or university is not eligible for the student exception. The regulation excludes medical residents from the student exception. See new regulations at: http://www.irs.gov/pub/irs-regs/td_9167.pdf

This is a matter that you should discuss with your tax professional. We cannot provide you with tax advice. Be aware that there are time limits for filing refund claims. Return to Top

Who should I contact with any questions?

If you have any questions, you may email residentficaproject@ouhsc.edu. Include your name, telephone number(s), e-mail address, current mailing address and years of residency or fellowship in your email message. Your inquiry will be answered by email as soon as possible. We will also update information on this webpage with any additional information as the refund claim process progresses. Return to Top

Once the IRS provides the FICA tax refund, when can I expect to receive my share of any refund?

Once the claims process is completed, the IRS will send the aggregate refund to the University. The amount refunded to the University will only include the employee share of FICA taxes for those residents who consented to the University’s refund claim. Although we do not know how long it will take for the IRS to administer the refund claim, once the University’s claim is allowed, we will send those residents who consented to the University’s refund claim a check for their share of the FICA tax refund in a timely manner. We anticipate this occurring before the end of the calendar year 2011. Return to Top

If I do receive a FICA tax refund, do I need to pay taxes on it?

No, the refund is not subject to income tax. However, the IRS intends to pay interest on your share of the FICA tax that is refunded. The interest paid by the IRS on your share of the FICA tax refund is subject to tax in the year it is received. You will be provided a form 1099 in the calendar year paid if more than $600 in interest is paid. You should contact your tax professional for more information on this subject and to discuss your specific tax situation. Return to Top

If I do receive a FICA tax refund, how does this affect my eligibility for and calculation of social security benefits?

Your eligibility for and calculation of social security benefits (either current or future) may be affected in the event of a refund, depending on your personal circumstances. If you consent to the refund claim, you will be issued a Form W-2c which will reflect a reduction in your earnings for social security benefits purposes. Whether social security benefits that you are receiving currently or in the future are impacted by a reduction of wage credits as a result of the refund will depend on your particular facts and circumstances. You should contact your local Social Security Administration office with any questions regarding your particular situation. Return to Top